The FCA’s final rules bring cryptoassets into the UK perimeter, as the Bank sets out how it will jointly oversee systemic stablecoin issuers
The Financial Conduct Authority (FCA) has published its final rules for regulating cryptoassets, including qualifying stablecoins, fixing the capital, backing-asset and redemption requirements firms must meet to secure authorisation before the regime goes live on 25 October 2027.
The rules set out in the FCA’s stablecoin issuance policy statement (PS26/10) arrive alongside a joint consultation with the Bank of England (the Bank) on how the two authorities will share oversight of issuers that HM Treasury recognises as systemic.
Both follow the Bank’s stablecoin policy statement and draft Code of Practice published last week, which dropped the holding limits the Bank had consulted on and set a £40bn issuance guardrail.
Raagulan Pathy, CEO at stablecoin platform KAST, tells Payment Expert the package gives firms the certainty they have lacked. “Clarity from regulators ultimately gives builders the stability they need to innovate,” he says, placing the UK’s move alongside the GENIUS and CLARITY acts in the US as evidence that global regulators are settling the rules stablecoins will run on.
FCA issuer rules
Under the FCA rules, an issuer must back a UK stablecoin to the full value of coins in issue, holding at least 10% in core assets such as on-demand deposits and short-term government debt, with the rest in a wider permitted set.
Redemptions must complete by the end of the next business day, and backing assets must sit in segregated accounts under a statutory trust, reconciled daily. The minimum own funds requirement is the higher of £350,000, three months of operating costs, or a K-factor charge of 1% of coins in issuance.
Carl Grimstad, CEO and Co-founder of crypto and stablecoin payment platform Lydian, tells Payment Expert: “Regulators have spent years in a defensive crouch when it comes to stablecoins,”, and easing the constraints is “the first real admission we’ve seen that the old closed-loop financial model is effectively dead”.
The limits were always “a band aid for a lack of visibility,” he adds, and the bottleneck “was never the asset. It was the capacity of the rails,” which in the UK “just got a lot wider”.
Two regulators, one regime
The joint consultation splits supervision between the Bank and the FCA, with the latter responsible for regulating every UK stablecoin issuer; once HM Treasury recognises an issuer as systemic, the Bank leads on prudential rules under joint oversight.
Systemic issuers face these firmer requirements:
- Backing split 30% in central bank deposits and 70% in short-term UK government debt of six months or less
- Redemption within 24 hours rather than the next business day
- A temporary issuance guardrail of £40bn per coin
The Bank also plans a lending facility offering collateralised liquidity to systemic issuers in stressed conditions.
In comments to Payment Expert, Deep Patel, Partner and UK payments lead at consultancy Capco, says: “For payment firms, this creates opportunities around faster settlement, cross-border payments and programmable payments,” while for banks it opens work in custody, safeguarding and settlement and adds pressure to build tokenised deposit products of their own.
Firms will have to prove they can support reliable redemption at face value “including under stress,” he says, alongside managing AML/KYC, liquidity, reconciliation and third-party dependencies.
Are stablecoins commercially viable for UK banks?
Issuers moving from solo FCA regulation to joint oversight would get a transition period the Bank expects to run between 12 and 36 months.
New entrants recognised as systemic at launch could follow a step-up path, holding up to 95% of backing in short-term government debt during an initial mobilisation stage before meeting the full split.
Mark Fairless, Group CEO of ClearBank, tells Payment Expert the regime still does not make the numbers work for issuers. The Bank “has clearly listened on holding limits, moving away from a complex and restrictive approach towards a more proportionate framework,” he says, but it remains “near impossible for banks to issue stablecoins in a commercially viable way,” leaving sterling “playing catch up” with its dollar and euro counterparts.
The framework, he argues, “should be a truly risk-based framework rather than a one-size-fits-all approach, otherwise the UK is in danger of leaving sterling stablecoins at the starting line while other markets move ahead”.
The authorities also confirmed that certain stablecoins can now be used for securities settlement in the Digital Securities Sandbox.
The authorisation gateway opens on 30 September 2026 and runs to 28 February 2027, with the joint consultation closing on the same date, ahead of the regime taking effect on 25 October 2027.
